Supplier Power Analysis

Supplier Power Analysis

See Also:
Supplier Power (one of Porter’s Five Forces)
Signs a Company is in Trouble
Problems When Experiencing Business Growth
Threat of New Entrants
Intensity of Rivalry

Supplier Power Analysis

When analyzing a given industry, all of the aforementioned factors regarding Porter a supplier power analysis may not apply. But some, if not many, certainly will. Of the factors that do apply, some may indicate high supplier bargaining power whereas some may indicate low supplier power. But the results will not always be straightforward. Therefore, consider the nuances of the analysis and the particular circumstances of the given firm and industry when using these data to evaluate the competitive structure and profit potential of a market.
Download the External Analysis whitepaper to gain an advantage by overcoming obstacles and preparing to react to external forces, For example, an external force is when it is a supplier’s market.

Bargain Power of Suppliers is High/Strong

Bargain power of suppliers is high/strong if any of the following applies:

Supplier Bargain Power is Low/Weak

Supplier bargain power is low/weak if any of the following applies:

  • Concentrated buyers
  • Buyer switching costs are low
  • Buyer is price sensitive
  • Threat of forward integration is low
  • Buyer purchases product in high volume
  • Product is undifferentiated
  • Buyer purchases comprise large portion of supplier sales
  • Substitutes are available
  • Buyer is well-educated regarding the product

Supplier Power Interpretation

When conducting Porter’s 5 forces supplier power analysis, low supplier power makes an industry more attractive and increases profit potential for the buyer. Conversely, high supplier power makes an industry less attractive and decreases profit potential for the buyer. Supplier power is one of the factors to consider when analyzing the structural environment of an industry using Porter’s 5 forces framework. Supplier power examples include both markets for new and rare products.
When you assess the supplier power, do not neglect other external forces. If you want to overcome obstacles and prepare to react to external forces, then download the free External Analysis whitepaper.
supplier power analysis
[box]Strategic CFO Lab Member Extra
Access your SWOT Analysis Execution Plan in SCFO Lab. The step-by-step plan to identify your strengths, weaknesses, opportunities, and threats.

Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]

supplier power analysis


Does your Accounting Department Produce Net Income?

Coaching the Entrepreneur: Learn how to know what you don’t know. How much should I spend on accounting for my company?     I have been in the accounting profession for 32 years, and for the last 6 years, I’ve owned my own consulting firm to assist companies with accounting challenges. There is one common theme that I

Read More »

Is Mexico the New China?

In the wake of the COVID-19 pandemic and escalating tensions with China, American companies are actively seeking alternatives to mitigate their supply chain risks and reduce dependence on Chinese manufacturing. Nearshoring, the process of relocating operations closer to home, has emerged as an explosive opportunity for American and Mexican companies to collaborate like never before.

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022


Financial Leadership Workshop


August 7-10th, 2023

WIKI CFO® - Browse hundreds of articles
Skip to content